NewDay has launched a credit-builder credit card that can help make it cheaper for customers to improve their rating.

Without a decent credit rating borrowers could struggle to get a mortgage, qualify for the best financial products or even take out a mobile phone contract.

Credit-building cards help people build up a credit history, but once you have got the financial history in place to apply for another card it can be a good idea to jump ship, as their rates tend to be high.

The marbles card offers the lowest interest rate on the market for those with a less-than-perfect credit score, at 24.8 per cent.

The deal signals the start of more affordable borrowing for those hoping to improve their rating.

Missing out on the top deals and having to opt for a more expensive alternative such as a pay-as-you-go phone or higher-rate loan due to a poor credit rating costs UK families £3.5 billion, according to credit card provider NewDay.

This means getting on top of your finances and kick-starting a responsible borrowing habit should be a top priority for those stuck on a low score.

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HOW THIS IS MONEY CAN HELP

Credit-builder cards are designed for those struggling to get accepted for a regular credit card because of a less than spotless credit history.

Applying straight off for a credit-builder card if you suspect you have a low rating, or if you have been rejected in the past, could be a good option for those applying for their first line of credit or attempting to rebuild their score after a history of missed payments or bad debts.

One of the worst things to do after a credit card rejection is to send off a handful of other applications. This will involve more searches on your file and make you look desperate for credit - making it harder to find a lender that will offer you a card.

The interest charged on these cards is usually set much higher than a standard card at between 30 and 50 per cent - but some providers will accept those with a history of debts or no repayment history at all.

Correcting your credit rating is by no means a quick fix, so choosing a creditbuilder card with a low interest rate is a good idea - but cardholders should aim to clear their balance each month to avoid paying interest altogether.

Through responsible use such as repaying on time and staying within their limit borrowers can begin to improve their rating.

WILL I BE ACCEPTED?

NewDay offers a soft search, which won't impact your credit rating, to see whether you are likely to be accepted or not.

This is an advantage for those struggling with a poor rating already, as multiple rejections can have a negative impact on your score.

In order to apply for the marbles deal there are some additional criteria that customers must meet in order to be accepted.

You must be over 18 years old and have a permanent UK address. It also requires that you have a bank or building society account and it will not accept any applicants who have been registered bankrupt in the past 18 months or received any County Court Judgements (CCJ) in the past year.

The marbles card comes with no annual fee but a high interest rate of 33.8 per cent, if you apply for the product directly from Newday, the provider.

However, if you go via price comparison site Money Supermarket the advertised rate drops to 24.8 per cent, the lowest available in the credit-builder market.

Although securing a cheaper interest rate is beneficial, 24.8 per cent - is still very high.

But it compares favourably with other similar products, which can charge interest of up to 40 or even 50 per cent.

Try and pay off your entire balance every month to avoid interest altogether.

Remember, not everyone will be offered the headline rate even if they are accepted.

Card providers are only required to offer the advertised rate to 51 per cent of successful applicants, meaning you could be offered a more expensive deal depending on your individual circumstances.

A decent selling point of the marbles card is the spending and payment text message alerts offered to cardholders.

This is a useful tool for staying on top of repayments so that you don't worsen your credit rating further or incur the £12 fee for spending over your limit.

Cardholders can also change the date they pay their credit card bill, to help with monthly budgeting.

Borrowers will be offered a limit of between £250 and £1,200, which will depend on their .

The marbles card does come with hefty charges for use abroad.

The issuer charges a non-sterling transaction fee of 2.95 per cent for using the card overseas plus an additional 3 per cent fee (minimum £3) for withdrawing cash.

Transferring a negative balance from another credit card will incur a 3 per cent fee.

Is a poor credit rating costing you? Rebuilding your score could help gain access to cheaper deals on your household bills according to research by NewDay

Are there any better options?

Deciding which card is right for you will depend on your priorities - whether that's the lowest interest rate available, loyalty points or interest-free balance transfers.

The marbles card currently offers the lowest possible interest rate deal for those looking to take out a credit-builder product - IF the card is taken out via Moneysupermarket.

It charges slightly higher standard interest at 24.9 per cent but it also comes with 0 per cent interest on balance transfers for 18 months with a 2.9 per cent transfer fee, plus three months 0 per cent interest on purchases.

However, this card comes with fairly strict application requirements including no history of missed repayments on existing loans or credit cards in the past year, an annual income over £17,500 and no history of bankruptcy.

The provider will also not accept anyone with debts - excluding a mortgage - on credit cards or store cards of more than 40 per cent of their income.

Tesco Bank offers a Foundation Clubcard Credit Card for those looking to make the most of their spending, rewarding shoppers with loyalty point for their spending. Find out more about the Tesco Bank reward scheme in our guide to supermarket reward cards here.

The Aqua Classic card offers the next cheapest way to rebuild your credit rating, charging 29.7 per cent interest. Although it charges slightly more the card gives customers the opportunity to increase their credit limit after four months through responsible use.

Representative example: If you spend £200 at a purchase interest rate of 18.9% p.a. (variable) your representative rate will be 18.9% APR (variable). Credit limits and terms may vary based on your individual circumstances. Balance transfer offers and introductory fees limited to transfer made with 60/90 days of account opening. See product specific T&Cs. * must spend £1k within 3 months

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